Page 85 - ICD AR21 EN

The adoption of the IFRS 10 amendments exempted the Corporation from the consolidation of its subsidiaries. The Corporation measures and evaluates the performance of all its subsidiaries on a fair value basis because using fair values results in more relevant information. As per the Amendments, investments in subsidiaries are measured at fair value through income statement. Any unrealized gains or losses arising from the measurement of subsidiaries at fair value are recognized directly in the income statement.
ii) Associates
An entity is classified as an associate of the Corporation if the Corporation can exercise significant influence on the entity. Significant influence is presumed to exist if the Corporation holds, directly or indirectly through its subsidiaries, 20 per cent or more of the voting rights in the entity, unless it can be clearly demonstrated otherwise. Conversely, significant influence may also exist through agreement with the entity’s other members or the entity itself regardless of the level of shareholding that the Corporation has in the entity.
The adoption of the Amendments requires investments in associates to be measured at fair value through
income statement. These investments are initially and subsequently measured at fair value. Any unrealized gains
or losses arising from the measurement of associates at fair value are recognized directly in the income statement.
iii) Other investments
Entities where the Corporation does not have significant influence or control are categorised as other investments.
iv) Sukuk investments
Sukuk are certificates of equal value representing undivided share in ownership of tangible assets, usufructs, services or (in the ownership) of assets of a particular project, measured at fair value through income statement.
v) Initial measurement
All investments are initially recorded in the statement of financial position at fair value. All transaction costs are recognised directly in income statement.
vi) Subsequent measurement
After initial recognition, all investments are measured at fair value and any gain or loss arising from a change in fair value is included in the income statement in the period in which it arises.
Impairment of financial assets
The Corporation applies the credit loss approach to financing instruments measured at amortized cost and treasury investments held at amortized cost. No impairment loss is recognized on equity and other investment carried at fair value. To assess the extent of credit risk, the financial assets are divided into three (3) categories:
i. Stage 1 – No significant increase in credit risk;
ii. Stage 2 – Significant increase in credit risk (SICR); and
iii. Stage 3 – Credit impaired financial assets.
Allocation to different stages is based on the degree of deterioration in the credit quality of the financial asset.
At each reporting date, the Corporation assesses whether there has been a significant increase in credit risk.
The Corporation monitors all financial assets, and financial guarantee contracts that are subject to the impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk the Corporation will measure the loss allowance based on lifetime rather than 12-month ECL.
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